Amazon Posts Record Q2 Profit and Higher Sales

Seattle, WA, United States (4E) – Amazon, the world’s largest online retailer with a record of paying its employees low wages, reported better-than-expected earnings on most operating metrics for the second quarter ending June 30.

It revealed sales of $52.9 billion, up 39 percent year-on-year from $37.96 billion, but a tad below analysts’ estimates of $53.35 billion. On the other hand, the company’s $2.5 billion second-quarter profit far exceeded Wall Street’s expectations. The $2.5 billion profit was a new quarterly record for Amazon, and was nearly 13 times larger than the profit the company posted in the second quarter of 2017.

On a per-share basis, Amazon’s earned $5.07, or more than twice what analysts estimated. Amazon’s stock was still up nearly four percent in after-hours trading on July 26 as investors remained buoyed by the company’s operating results. Amazon’s stock traded up $65.83, or 3.6%, to $1,873.83 at the end of the day on July 26.

It reported strong gains for most of its operating divisions, but its advertising and North American retail segment were particularly noteworthy.

“It was a strong quarter,” said Amazon CFO Brian Olsavsky. He traced the company’s much better-than-expected bottom line to its ability to hold the line on operating costs, and to a fillip from its fast growing and very profitable advertising business.

“Advertising is starting to make an impact on our gross profit,” said Olsavsky.

Amazon’s Q2 results, however, benefited from the overvalued U.S. dollar, which continued to appreciate against other currencies. Amazon said this stroke of luck boosted the dollar value of Amazon’s overseas sales, and added as much as $760 million to its revenue and $466 million to its net income in the period.

Analysts noted that without the exchange rate boost, Amazon’s revenue miss would have been larger since its sales growth for the period would have been 37% instead of 39%. Without this jump and a few other minor adjustments, Amazon would have posted $2.07 billion in Q2 income, or $4.14 a share.

Amazon cheered the market by offering a more optimistic outlook for its bottom line in the third quarter compared to estimates by analysts. It estimated Q3 revenues rising from $54 billion to $57.5 billion. Wall Street’s prior forecast was $58.03 billion. In Q3 2017, Amazon posted $43.74 billion in revenues.

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